Cash transaction limit: Bane for corporates, boon for MFS

In the budget proposal for fiscal 2022-23, the government has proposed to cut the corporate tax rate by 2.5 percentage points in a bid to give the businesses an additional space to tackle the fallout of the pandemic and the war.

Though the government slashed the corporate tax for the third year in a row, this time it has tagged a condition to enjoy the benefit. A company must transact any expenditure or investment above Tk12 lakh through banks or MFS if it wants to avail of the tax-cut benefit, according to the budget proposal.

While trade bodies and corporate houses have been opposing the budget proposal saying that the cash transaction amount is very low compared to their needs, some others say the move would help the country become more transparent and cashless.

“We count it as a very clear mandate for the cashless initiative of the government for the citizens. This proposal shows the positive intention of the government for digital payments and also the acknowledgment of mobile payments from the policy-making side,” said Tanvir A Mishuk, managing director of Nagad Limited.

He said he is very much hopeful that the decision will help the mobile financial services providers to grow further.

bKash, the leader in the MFS industry, is also upbeat about the potential growth of digital payment in the country because of the cash transaction limit.

“This proposal will surely encourage all involved, including consumers, merchants, service providers, financial institutions as well as MFS operators,” said Moinuddin Mohammed Rahgir, the chief financial officer of bKash.

He said the move also clearly reiterates the government’s continued commitment to strengthening an inclusive digital payment ecosystem in the country.

Since the beginning of the Covid-19 pandemic in March 2020, transactions through MFS have been rising fast because of its convenience.

Bangladesh Bank data showed MFS transactions rose by 29 percent year-on-year in March to Tk 77,022 crore. The transaction volume was 13 percent higher than in February.

According to BB data, users deposited Tk 23,707 crore to their accounts in March, withdrew Tk 20,791 crore, transferred (person to person) Tk 22,288 crore, and paid utility bills worth Tk 1,232 crore. The government disbursed salaries and stipends Tk 2,877 crore in March.